To tighten control over brand extensions related to restricted categories such as liquor and tobacco, the Advertising Standards Council of India (ASCI) has reinforced its guidelines for the ‘Qualification of Brand Extension Products and Services.’ The amendments, detailed in Chapter III Clause 3.6(a) of the ASCI code, respond to recent high-profile sporting events in India featuring lavish celebrity endorsements.

ASCI’s earlier adjustments to brand extension guidelines prompted the need for further reinforcement, focusing on establishing stringent standards for business, investment, and distribution. The council aims to ensure that brand extensions meet specific criteria to be recognized as genuine extensions, particularly in the context of restricted product categories.

The key features of the revised code include:

1. Proportional Advertising Expenditure:

ASCI now mandates that the advertising budget for legitimate brand extensions of restricted master brands align with the extension’s sales turnover. The prescribed ratios limit advertising budgets to 200 percent of turnover in the initial two years. Subsequently, the allocation decreases to 100 percent in the third year, 50 percent in the fourth year, and remains at 30 percent thereafter. This comprehensive approach covers media spending across all types of media, celebrity endorsement payments, and the average advertising production cost over the past three years. This measure ensures a balanced and proportional advertising investment in line with the extension’s sales performance over time.

2. Treatment of Variants:

Variants launched under the brand extension will not be considered separate extensions. The original date of the first brand extension will be applied for clarity and consistency.

3. Certification by Reputable CA Firms:

To ensure authenticity and compliance, brand extensions must have their qualifications for advertising certified by reputable and independent Chartered Accountant (CA) firms. This certification process adds a layer of reliability to the evidence supporting the brand extension. It underscores the importance of an unbiased and professional evaluation. Failure to meet the updated qualifications will lead ASCI to categorize a brand extension as a surrogate created to promote a restricted category rather than a genuine extension.

These updates by ASCI demonstrate a commitment to preserving the integrity of advertising in India, upholding ethical standards, and safeguarding consumers from potentially misleading practices. By placing a strong emphasis on proportional advertising expenditure and certification by reputable CA firms, ASCI aims to ensure that brand extensions in restricted categories adhere to stringent guidelines, reinforcing the credibility of the advertising landscape in the country.